Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698939380207.pdf (South Africa)
Wednesday, 1 November 2023] No 150—2023] FIFTH SESSION, SIXTH PARLIAMENT PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA _____________________ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS _____________________ WEDNESDAY, 1 NOVEMBER 2023 _____________________ TABLE OF CONTENTS ANNOUNCEMENTS National Assembly and National Council of Provinces 1.

Draft Bills submitted – Joint Rule 159 ............................................................................ 2 2.
Referral of Bills to National House of Traditional and Khoi-San Leaders ..................... 2 National Assembly 1.

2.

Introduction of Bills ........................................................................................................ 3 Referral to Committees of papers tabled ......................................................................... 4 National Council of Provinces 1.
Referral to Committees of papers tabled ......................................................................... 5 TABLINGS National Assembly and National Council of Provinces 1 1.

Minister of Finance ......................................................................................................... 6 2.

Minister of Defence and Military Veterans .................................................................... 6 3.
Minister of Forestry, Fisheries and Environment ........................................................... 6 4.

Minister of Social Development ..................................................................................... 6 National Assembly 1.

Speaker ............................................................................................................................ 7 National Council of Provinces 1.
Chairperson ..................................................................................................................... 7 COMMITTEE REPORTS National Assembly 1.

2.

3.

4.
Public Enterprises ............................................................................................................. 9 Justice and Correctional Services ................................................................................... 53 Justice and Correctional Services ................................................................................... 56 Justice and Correctional Services ................................................................................... 59 National Council of Provinces 1.
Security and Justice ........................................................................................................ 61 ANNOUNCEMENTS National Assembly and National Council of Provinces The Speaker and the Chairperson 1.

Draft Bills submitted in terms of Joint Rule 159 (1) Tax Administration Laws Amendment Bill, 2023, submitted by the Minister of Finance.

Referred to the Standing Committee on Finance and the Select Committee on Finance, for information.

2.
2.

Referral of Bills to National House of Traditional and Khoi-San Leaders (1) The Secretary to Parliament has, in accordance with section 39(1) of the Traditional and Khoi-San Leadership Act, 2019 (Act No.

3 of 2019), referred the Public Service Commission Bill [B30–2023] (National Assembly – sec 76) to the National House of Traditional and Khoi-San Leaders, which must, within 60 days 2 from the date of the referral (viz.

1 November 2023), make any comments it wishes to make.
National Assembly The Speaker 1.

Introduction of Bills (1) The Minister of Finance (a) Division of Revenue Amendment Bill [B33–2023] (National Assembly – proposed sec 76) [Explanatory summary of Bill and prior notice of its introduction published in Government Gazette No.

49550 of 24 October 2023.]

Introduction and referral to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160.
In terms of Joint Rule 154 written views on the classification of the Bill may be submitted to the JTM.

The Bill may only be classified after the expiry of at least three parliamentary working days since introduction.

(b) Adjustments Appropriation Bill [B34–2023] (National Assembly – proposed sec 77).

Introduction and referral to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160.
In terms of Joint Rule 154 written views on the classification of the Bill may be submitted to the JTM.

The Bill may only be classified after the expiry of at least three parliamentary working days since introduction.

(c) Rates and Monetary Amounts and Amendment of Revenue Laws Bill [B35–2023] (National Assembly – proposed sec 77).
Introduction and referral to the Standing Committee on Finance of the National Assembly, as well as referral to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160.

In terms of Joint Rule 154 written views on the classification of the Bill may be submitted to the JTM.

The Bill may only be classified after the expiry of at least three parliamentary working days since introduction.

(d) Taxation Laws Amendment Bill [B36–2023] (National Assembly – proposed sec 77).
3 Introduction and referral to the Standing Committee on Finance of the National Assembly, as well as referral to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160.

In terms of Joint Rule 154 written views on the classification of the Bill may be submitted to the JTM.

The Bill may only be classified after the expiry of at least three parliamentary working days since introduction.
(e) Tax Administration Laws Amendment Bill [B37–2023] (National Assembly – proposed sec 75) [Explanatory summary of Bill and prior notice of its introduction published in Government Gazette No.

49576 of 27 October 2023.]

Introduction and referral to the Standing Committee on Finance of the National Assembly, as well as referral to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160.
In terms of Joint Rule 154 written views on the classification of the Bill may be submitted to the JTM.

The Bill may only be classified after the expiry of at least three parliamentary working days since introduction.

(f) Eskom Debt Relief Amendment Bill [B38–2023] (National Assembly – proposed sec 77).

Introduction and referral to the Standing Committee on Appropriations of the National Assembly, as well as referral to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160.
In terms of Joint Rule 154 written views on the classification of the Bill may be submitted to the JTM.

The Bill may only be classified after the expiry of at least three parliamentary working days since introduction.

(g) Revenue Laws Amendment Bill [B39–2023] (National Assembly – proposed sec 77).

Introduction and referral to the Standing Committee on Finance of the National Assembly, as well as referral to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160.
In terms of Joint Rule 154 written views on the classification of the Bill may be submitted to the JTM.

The Bill may only be classified after the expiry of at least three parliamentary working days since introduction.

2.

Referral to Committees of papers tabled (1) The following paper is referred to the Standing Committee on Appropriations for consideration: (a) Medium-Term Budget Policy Statement 2023.
4 (2) The following paper is referred to the Standing Committee on Finance for consideration and report: (a) The Revised Fiscal Framework and Revenue Proposals 2023.

(3) The following paper is referred to the Portfolio Committee on Public Enterprises for consideration and report.
Report of the Auditor-General is referred to the Standing Committee on Public Accounts for consideration: (a) Integrated Report and Financial Statements of Alexkor SOC Limited for 2021-22, including the Report of the Auditor-General on the Financial Statements and Performance Information for 2021-22.

(4) The following paper is referred to the Portfolio Committee on Employment and Labour for consideration and report.
Report of the Auditor-General is referred to the Standing Committee on Public Accounts for consideration: (a) Report and Financial Statements of the Unemployment Insurance Fund (UIF) for 2021-22, including the Report of the Auditor-General on the Financial Statements and Performance Information for 2021-22.
(5) The following paper is referred to the Portfolio Committee on Cooperative Governance and Traditional Affairs for consideration: (a) Letter from the Auditor-General dated 31 October 2023, to the Speaker of the National Assembly on the delay in submission of separate and consolidated financial statements of local government: Municipal Finance Management Act 56 of 2003 (MFMA) auditees for the financial year ended 30 June 2023.

National Council of Provinces The Chairperson 1.


Referral to Committees of papers tabled (1) The following paper is referred to the Select Committee on Appropriations for consideration in accordance with its mandate as set out in section 6 of the Money Bills Amendment Procedure and Related Matters Act, 2009 (No.

9 of 2009): (a) Medium-Term Budget Policy Statement [2023].
(2) The following paper is referred to the Select Committee on Finance for consideration and report in accordance with its mandate as set out in section 6 and 12 of the same Act: (a) The Revised Fiscal Framework and Revenue Proposals [2023].

5 National Assembly and National Council of Provinces TABLINGS 1.
The Minister of Finance (a) Medium-Term Budget Policy Statement, 2023; including the Revised Fiscal Framework; [RP 328 – 2023] (b) Adjusted Estimates of National Expenditure, 2023 [RP 326 – 2023] (c) Division of Revenue Amendment Bill, 2023 [B33 – 2023].

(d) Adjustments Appropriation Bill, 2023 [B34 – 2023].
(e) Rates and Monetary Amounts and Amendment of Revenue Laws Bill, 2023 [B35 – 2023] (f) Taxation Laws Amendment Bill, 2023 [B36 – 2023] (g) Tax Administration Laws Amendment Bill, 2023 [B37 – 2023] (h) Eskom Debt Relief Amendment Bill, 2023 [B38 – 2023] (i) Revenue Laws Amendment Bill, 2023 [B39 – 2023] 2.
The Minister of Defence and Military Veterans (a) Report and Financial Statements of Vote 26 – Department of Military Veterans for 2022-23, including the Report of the Auditor-General on the Financial Statements and Performance Information of Vote 26 for 2022-23.

3.

The Minister of Forestry, Fisheries and Environment (a) Revised Annual Performance Plan of the Department of Forestry, Fisheries and Environment for 2023-24.
(b) Annual Performance Plan Mid-Year Review of the South African National Biodiversity Institute (SANBI) for 2023-2024.

(c) Revised Annual Performance Plan of the South African Weather Service for 2023- 24.

(d) Annual Performance Plan Mid-Year Review of the South African National Parks for 2023-24.

(e) Annual Performance Plan Mid-Year Review of the iSimangaliso Wetland Park Authority for 2023-24.

(f) Annual Performance Plan Mid-Year Review of the Marine Living Resources Fund for 2023-24.

6 4.
6 4.

The Minister of Social Development (a) Revised Annual Performance Plan of the Department of Social Development for 2023/24.

(b) Revised Annual Performance Plan of the National Development Agency for 2023/2024.

National Assembly 1.
The Speaker (a) Letter dated 31 October 2023, from the Minister of Agriculture, Land Reform and Rural Development to the Speaker of the National Assembly, explaining the reasons for the further delay in the tabling of the Annual Report of the Onderstepoort Biological Products (OBP) for 2022/23: Dear Honourable Speaker FURTHER EXTENSION: LATE TABLING OF THE 2022/2023 ANNUAL REPORT OF THE ONDERSTEPOORT BIOLOGICAL PRODUCTS (OBP) We request for further extension of the tabling of the above-mentioned report.
The OBP will be able to the table its 2022/2023 Annual Report on 30 November 2023.

The Public Finance Management Act, 1999 (Act No.

1 of 1999) and National Treasury Regulations prescribe that all national departments and public entities must table their Annual Reports to the relevant legislatures within five months after the end of financial year.
The Onderstepoort Biological Products (OBP) will not be able to table its 2022/2023 Annual Report within the stipulated period due to current engagements with the Auditor-General of South Africa (AG-SA).

Kind regards (Signed) MRS A T DIDIZA (MP) MINISTER FOR AGRICULTURE, LAND REFORM AND RURAL DEVELOPMENT National Council of Provinces 1.
The Chairperson (a) Letter dated 31 October 2023, from the Minister of Agriculture, Land Reform and Rural Development to the Chairperson of the National Council of Provinces, explaining the reasons for the further delay in the tabling of the Annual Report of the Onderstepoort Biological Products (OBP) for 2022/23: Dear Honourable Chairperson 7 FURTHER EXTENSION: LATE TABLING OF THE 2022/2023 ANNUAL REPORT OF THE ONDERSTEPOORT BIOLOGICAL PRODUCTS (OBP) We request for further extension of the tabling of the above-mentioned report.
The OBP will be able to the table its 2022/2023 Annual Report on 30 November 2023.

The Public Finance Management Act, 1999 (Act No.

1 of 1999) and National Treasury Regulations prescribe that all national departments and public entities must table their Annual Reports to the relevant legislatures within five months after the end of financial year.
The Onderstepoort Biological Products (OBP) will not be able to table its 2022/2023 Annual Report within the stipulated period due to current engagements with the Auditor-General of South Africa (AG-SA).

Kind regards (Signed) MRS A T DIDIZA (MP) MINISTER FOR AGRICULTURE, LAND REFORM AND RURAL DEVELOPMENT COMMITTEE REPORTS National Assembly 8 1.
Budgetary Review and Recommendations Report of the Portfolio Committee on Public Enterprises, dated 25 October 2023 The Portfolio Committee on Public Enterprises (hereinafter referred to as the Committee), having considered the performance of the Department of Public Enterprises and its state-owned companies for the 2022/23 financial year, reports as follows: 1.

INTRODUCTION 1.1 Purpose of the BRRR In terms of Section 5 of the Money Bills Amendment Procedure and Related Matters Act, No.
9 of 2009, the National Assembly, through its Committees, must annually compile the Budgetary Review and Recommendation Reports (BRRRs) that assess the service delivery performance of departments given available resources.

Committees are also expected to provide an assessment of the effectiveness and efficiency of the Department’s use of available resources and may include recommendations on the forward use of resources.
1.2 The Role and Mandate of Committee The mandate of the Committee is to consider legislation referred to it; exercise oversight over the Department and the seven State-Owned Companies (SOCs) that report to it; consider international agreements referred to it; consider the budget vote of the Department of Public Enterprises and its entities; facilitate public participation in its processes; and to consider all other matters referred to it in terms of legislation and the rules of the National Assembly.
1.3 Description of Core Functions of the Department The Department of Public Enterprises is the shareholder representative for government on the State-Owned Companies in its portfolio.
The Department’s mandate is to fulfil oversight responsibilities at these State-Owned Companies to ensure that they contribute to the realisation of government’s strategic objectives, as articulated in the National Development Plan (NDP), 1 9 the Medium-Term Strategic Framework (MTSF), the New Growth Path (NGP) and the Industrial Policy Action Plan (IPAP).

State-Owned Companies are crucial to driving the state’s strategic objectives of creating jobs and enhancing equity and transformation.
The Department does not directly execute programmes but seeks to use state ownership in the economy to support the achievement of these objectives.

It is within this context that the BRRR concerning the Department of Public Enterprises by the Portfolio Committee on Public Enterprises is presented.

1.4 Method This report is a culmination of the Committee’s engagement and interactions with the Department and the State-Owned Companies that report to it.
This entailed a very intense and thorough analysis of the strategy and operations of the Department and its entities through briefings, oversight visits and interaction with relevant stakeholders.
These included a briefing from the Department of Public Enterprises on its annual report and a briefing from the Office of the Auditor-General of South Africa (AGSA) on the audit outcomes of the Department and its entities on 11 October 2022 and deliberations on the analysis done by Parliament support staff on the financial and non-financial performance of the Department and its entities.
1.5 Outline of the Contents of the Report The Budgetary Review and Recommendation Report (BRRR) of the Committee contains the following: § Overview of the key relevant policy focus areas.

§ Summary of previous key financial performance recommendations of the Committee.

§ Overview and assessment of financial performance.

§ Overview and assessment of service delivery performance.

§ Committee recommendations.

2 10 2.


OVERVIEW OF THE POLICY ENVIRONMENT According to the World Bank, electricity supply shortages have constrained South Africa’s growth for several years.

Rolling scheduled power cuts (load-shedding) started in 2007 and have intensified exponentially, reaching close to 9 hours daily in 2022.

This severe electricity shortfall has disrupted economic activity and increased operating costs for businesses, many of which rely on costly diesel generators.
It has also affected other infrastructure such as water, IT, and service delivery (health and education).

Although new reforms and investments are being considered, load-shedding is expected to continue for at least two more years.

Weak structural growth and the COVID-19 pandemic have exacerbated socio-economic challenges.

South Africa has recovered its pre-pandemic GDP but not its employment level.
At the end of the second quarter of 2023, there were still about 74,000 fewer jobs than at the end of 2019, with women and youth persistently more impacted.

Inequality remains among the highest in the world, and poverty was an estimated 62.6% in 2022 based on the upper-middle-income country poverty line, only slightly below its pandemic peak.

These trends have prompted growing social demands for government support, which could put the sustainability of public finances at risk if they are to be met.
The global environment remained supportive but increasingly severe domestic constraints led to GDP growth slowing to 1.9% in 2022 from 4.7% in 2021.

Mining production fell while manufacturing production stagnated, as load-shedding and transport bottlenecks intensified.

The services sectors (financial, transport, and personal) and domestic trade were key drivers of growth.

The labour market has remained weak.


The employment ratio only increased slightly to 39.4% at the end of 2022 and 40.1% in the second quarter of 2023 from a pandemic low of 35.9% in September 2021.

In this context, the COVID-19 Social Relief of Distress Grant, introduced in May 2020, was extended for another year until March 2024.

Socio-economic challenges were further exacerbated by rising fuel and food (bread and cereals) prices, which disproportionately affected the poor.
Inflation averaged 6.9% in 2022 but was 8.2% for those at the bottom 20% of the income distribution.

2.1 Key Development Challenges South Africa has taken considerable strides to improve the well-being of its citizens since its transition to democracy in the mid-1990s, but progress has stagnated in the last decade.
The percentage of the population living below the upper-middle-income country poverty line fell from 3 11 68% to 56% between 2005 and 2010 but has since trended slightly upwards, to 57% in 2015, and is projected to have reached 60% in 2020.

Structural challenges and weak growth have undermined progress in reducing poverty, heightened by the COVID-19 pandemic.
The achievement of progress in household welfare is severely constrained by rising unemployment, which reached an unprecedented 35.3% in the fourth quarter of 2021.

By the second quarter of 2023, the unemployment rate had declined marginally to 32.6%, still above the already high pre-pandemic levels.

The unemployment rate is highest among youths aged between 15 and 24, at around 61%.
Other structural challenges have also increased, transport and logistics, which have deteriorated due to weak management of the state-owned enterprise Transnet, theft, and sabotage, constraining South Africa’s export capacity.

South Africa remains a dual economy with one of the highest and most persistent inequality rates in the world, with a consumption expenditure Gini coefficient of 0.67 in 2018.
High inequality is perpetuated by a legacy of exclusion and the nature of economic growth, which is not pro-poor and does not generate sufficient jobs.

Inequality in wealth is even higher, and intergenerational mobility is low, meaning inequalities are passed down from generation to generation with little change over time.

The President made the following pronouncements in his State of the Nation Address in February 2023.

Government priorities for 2023 are the following: § Load-shedding.

§ Unemployment.
§ Unemployment.

§ Poverty and the rising cost of living.

§ Crime and Corruption.

In July last year, President Ramaphosa announced a clear action plan to address the energy crisis.

This was to address the electricity shortfall of 4000 to 6000 megawatts (MW).

The plan outlined five key interventions to: § fix Eskom’s coal-fired power station and improve the availability of existing supply.

§ enable and accelerate private investment in generation capacity.
4 12 § accelerate procurement of new capacity from renewables, gas and battery storage.

§ unleash businesses and households to invest in rooftop solar; and § fundamentally transform the electricity sector to achieve long-term energy security.

Government made important progress in implementing the plan.
The Minister of Public Enterprises, Mr. Pravin Gordhan, outlines the following policy priorities in the annual performance plan for the 2023/24 financial year: • Implementation of the recommendations of the Presidential State-Owned Enterprises Council (PSEC), and the development of the SOE Bill, including the establishment of the holding company for strategic SOCs.

• The completion of the establishment of the National Transmission Company in line with the Eskom Roadmap.
• The conclusion of the Strategic Equity Partnership for SAA.

• The finalisation and implementation of the Transnet Roadmap.

3 SUMMARY OF PREVIOUS YEAR’S BRRR’S RECOMMENDATIONS MADE BY THE COMMITTEE KEY PRIORITIES Shareholder management and governance.

Improve internal control systems (unqualified audit).

RECOMMENDATIONS PROGRESS AND PLANS 3.1.1 that Ensure shareholder compacts are the 3rd concluded by quarter year preceding the year covered by the compact.
the of that controls to ensure the 3.1.2 Ensure Officer Accounting and improves systems the department achieves an unqualified audit outcome and matters of emphasis from each year must be The department planned to sign 6 Shareholder Compacts but to date, no Shareholder Compact has been signed, due to engagements delays with SOCs like Eskom and Transnet.

With regards to Alexkor a new board has been given time to review the draft, regarding Safcol, the department is awaiting the SOC to sign and submit back.
In terms of SAA and Denel shareholder compacts will not be signed due to business recue and financial challenges.

The Department continues to receive an unqualified audit outcome systems and controls are improved.

5 13 KEY PRIORITIES RECOMMENDATIONS PROGRESS AND PLANS in addressed subsequent year.

the Annual financial statement submission.

that the 3.1.3 Ensure annual financial statements are submitted on time.

Address AGSA findings.


3.1.4 Ensure that findings on the Department and in the Auditor SOCs by General of South Africa (AGSA) are addressed.

The Department will continue to submit the annual financial statements on time, the matter of emphasis which in the main related to misstatements in submitted financial statements and not complying fully with procurement prescripts are noted and will be addressed going forward.

The department on bi-annual basis monitors implementation of AGSA findings.
Transnet received an unqualified audit opinion in FY2021/22 for the first time in 5 years.

SAFCOL received its third consecutive unqualified audit opinion in FY2021/22.

Eskom and Alexkor are likely to have their audits completed later this year, the outcome is likely to be a qualified audit.

SAA and Denel cannot afford to appoint external auditors for previous financials years due to financial challenges.

SAA is expected to finalise the outstanding audits by 31 March 2023.
Majority of adverse findings being reported are due to financial challenges and poor internal controls.

6 14 KEY PRIORITIES Improve capacitation of board audit and risk committee.

RECOMMENDATIONS PROGRESS AND PLANS the Improve 3.1.5 capacitation of board audit and the risk committee, internal audit function in the to Department and SOC respond better audit outcomes in the line with the provisions of the PFMA.
to In line with the Companies Act, MOI and PFMA, each SOC must have an Audit and Risk Committee in place that reports audit performance and outcomes to the Shareholder Minister.

The Eskom Board was appointed and has an Audit and Risk Committee (ARC) in place.

Safcol Board was re-appointed and has an ARC in place.

Alexkor Interim Board has been reappointment but needs a CA(SA) to be appointed to properly constitute its ARC.
Denel Interim Board has an ARC in place, SAA Interim Board requires additional capacity to properly constitute its ARC.

Transnet Board has ARC in place.

Both internal and external audit functions are the responsibility of the SOC’s Board and Management.

All Audit Reports are tabled annually at the SOC’s AGM.

Institute consequence management executive management.
for and 3.1.6 Institute consequence management for executive and management who deliberately or negligently ignore their duties and contravene legislation.

The department has identified 73 cases of director delinquency proceedings.

The cases are currently being consulted with SOEs, namely Alexkor, Denel, SAA, Transnet, and Eskom.
Complaints to launch director delinquency proceedings against former board members are planned to be registered with the CIPC by 31 March 2023. the The department and SOEs are cooperating with law enforcement agencies to pursue civil and criminal proceedings that are led by law enforcement agencies.

The plan was published by the Presidency and tabled in parliament in October 2022.

7 15 audits reviews of of Lifestyle and conflicts interest.
Ensure the 3.1.7 of implementation proactive lifestyle audits and reviews of conflicts of interest based on risk analysis in all SOCs.

The department monitors compliance with the Risk and Integrity Management Framework.

The framework prohibits SOE employees from doing business with their respective companies; and from accepting gifts from companies doing business with the SOE.
All SOEs have been instructed to develop plans to ensure interest disclosure 100% compliance with financial requirements to prevent, detect and correct instances of conflict of interest; and ensure appropriate consequence management measures are imposed when employees are found to abuse the positions of authority.

5299 employees were subjected to risk-based lifestyle audits.

63 cases of conflict of interest relating to the awarding of procurement contract to SOE employees are under investigation.
The department continues to track progress on implementation of SOE plans and investigations.

Consultations are underway with the DPSA with the view to extend DPSA’s financial interest disclosure capability to SOEs under the DPE; and to ensure that all SOE’s employees are subjected to lifestyle audits when the DPSA’s framework and strategy that is planned for implementation during 2023/24 financial year commences.
8 16 SOE development Bill 3.1.8 Update the Committee on a quarterly basis on the development of SOE Bill.

The Department of Public Enterprises has drafted a National State Enterprises Bill.

The objective of the Bill is to provide a mechanism for the State to: • • • in order the operational efficiency of State the State’s to achieve Enhance enterprises, developmental objectives.

Ensure the uniform governance of State enterprises; and Promote the commercial sustainability of State enterprises.
To this end, the Bill addresses the following issues, amongst others: • Role, functions and duties of Board; • Composition of the Board; • Board committees; • • Audit of holding company; • National Strategy for state enterprises; • Shareholder powers and duties.

Standards of director conduct; The SOE Bill will be taken through a process of consultation with relevant stakeholders.

The necessary consultations has commenced.

equity Strategic partnerships and oversight plans for SAA.
Present the 3.1.9 the Committee with conclusion of strategic equity partnerships and oversight plans for SAA.

Guidelines will be developed in the current financial year consultation with other stakeholders like PIC, Telkom etc for benchmarking will be conducted before the end of the financial year.

Liquidation of SA Express.

Unbundling Eskom entities, into of three 3.1.10 Present the the Committee liquidation of SA Express.
on to Present the 3.1.11 a with Committee progress report on the SOC restructuring process and progress updates on the unbundling of Eskom into three entities, namely Generation, Transmission and Distribution.

Court finalised liquidation on the 14 September, actual liquidation is ongoing Master of Court must call meeting of creditors and appoint final liquidator.

The Transmission Company was incorporated as subsidiary of Eskom Holdings in December 2021.
The operationalisation of is dependent on the approval of the license by NERSA and the lenders consent the Transmission Company The PFMA 2 approval for Distribution subsidiary is being reviewed by DPE The due diligence for the establishment of the New Holding Company will be submitted to DPE following Board approval in February 2023 Model oversight for SOCs oversight 3.1.12 Present a model for per SOCs programme, with clear targets on monitoring, evaluations and reporting within this financial year.
The department has a oversight model that is implemented in line with Shareholder Compacts on quarterly basis, SOCs performance is monitored and evaluated on quarterly basis.

PSEC work includes developing a broader government oversight model.

9 17 Communication in SOCs in order to educate the public on the role of SOCs.

Ensure Alexkor achieves its public and commercial mandate.
in and role 3.1.13 Improve communication in SOCs in order to educate the public on the role of SOCs, their their capabilities developmental the economy.

3.1.14 Provide the Committee with progress update on efforts to ensure Alexkor achieves its public and commercial mandate, especially socio- the economic outcomes of Richtersveld and Alexandra Bay communities.
addressing Future SAFCOL role of 3.1.15 Ensure that the future role of SAFCOL is clarified and that the commercial and public and public mandates are diversified and expanded, community land claims issues are resolved.

Denel restructuring process and address the issue of payment of staff.
Protect particular advanced skills jobs in highly technical process 3.1.16 Ensure that the future of Denel is clarified including its and restructuring address the issue of payment of staff in these subsidiaries Denel Dynamics, Denel Land Systems, Denel Pretoria Metal Pressing, Denel Aeronautics and Denel Vehicle Systems.

3.1.17 Ensure that SOCs protect highly in jobs technical skills advanced to advance the manufacturing capability of the state.
SOCs should invest in labour intensive infrastructure programmes to create employment.

particular The department appointed expertise to give support on communication responsibilities.

The department has reviewed communication strategy in line with public perception survey and amended in line with the national strategic communication framework.
in operational and The Joint Board of Alexkor and Richtersveld Mining Company (PSJV Board) is working towards stabilising the joint venture operations following the significant decline financial performance observed over the past five years.

Interventions include expansion of current operation through partnership with external parties with sufficient capital to undertake the operations.

This exercise is currently underway, and the outcome is expected by second quarter of the year.
Alexkor will be looking into various project including mariculture, renewable energy, and farming in an attempt to create jobs for the community.

The Boegoebaai Port and Green Hydrogen energy project is expected to improve the socio-economic outlook of the Richtersveld community.

Alexkor and the Richtersveld community play an integral role in the success of the project which is coordinated and led by the Presidency SAFCOL role has been clarified.
The Strategic Intent Statement communicated to Board by the Executive Authority is clear on expectation.

The SOC is expected to invest in the capital project to grow revenue.

In this case the SOC developed a 50:50 strategy.

Land claim settlement process is still unresolved.

The responsible party is DALRRD.

In the interim SAFCOL is supporting claimant communities through the CSI & ESD business model.

Denel has developed a restructuring plan which has been approved by the Executive Authority.
The restructuring plan formed the basis for approaching the National Treasury for shareholder capitalisation of which R3.4 billion was special in appropriation.
All outstanding salary payments were settled in August 2022. the 2022/23 allocated improve management and Leadership and management development in To Generation, the following programmes were revived and are currently being offered for leaders at all levels: • Generation Technical Leadership Programme • Management Development Programme (Snr & leadership skills Middle Managers and Supervisors) • Top Talent Programme 10 18 • Top Programme for Millennials Technical Training The business has also identified key focus areas on technical training, which include amongst others: • Training resources and capacitation survey conducted to establish gaps and improvement areas • Prioritisation of reauthorization of both Artisans and Operators to ensure plant is management effectively as per operating and engineering standards • Partnered with Eskom Academy of Learning to revive the Artisan Training The resolving of critical dependencies is critical to ensure that the process is completed with the stipulated timelines Restructuring of Eskom is completed that Ensure of Eskom the 3.1.18 is restructuring set completed within timeframes and maintenance of power stations is done on time.
the Eskom updates the Committee on its maintenance programme plans and the Eskom 3.1.19 Ensure updates the Committee on its maintenance programme and plans to curtail load shedding on timeous basis.

The Generation Recovery plan was approved by the Board following a broader consultation.
The progress update will be provided on maintenance and curtailing loadshedding Capacitating technical functions core technical 3.1.20 Focus on capacitating core functions, develop and enhance technical ensure skills and sound implementation operational systems engineering business processes to ensure effective technical oversight.

and of Eskom has embarked on an elaborate plan to improve skills capacity in the Generation space.
Below find progress on a number of initiatives in support of building technical skills capacity: Skills Audit: • A Skills Audit exercise was concluded in 2022 to establish the skills baseline and improvement areas.
• The audit findings were shared with the business and the organization is currently finalizing action plans to close the identified competence gaps Recruitment of Critical Skills • A Focused Recruitment Drive and Crowd sourcing platform was established to source critical skills required to turn around Generation performance.

Generation has filled 1355 critical positions through recruitment projects of which: o 603 skills were sourced externally.
o 752 recruited from within Generation and other Divisions o Crowdsourcing has attracted 16 resources from July 2022 to date.

11 19 Learner Pipeline • Generation is currently training 484 Learners in the system as a pipeline for technical skills.

• Recruiting for additional 233 new learners will start on 1 February 2023. department The implemented Board evaluation performance is reviewed and evaluated annually.

and framework.
and framework.

Board 2019/2020 developed in • This is carried out through ensuring that finding financial in relating to raised by ASGA management is addressed • The performance is monitored through the quarterly reports submitted by the SOC board • The Departments ensures that the quarterly reports provide the required information in order to carry out the oversight function and where improvements are required, this is raised with the SOC Board.
• The Department is building capacity to ensure that it effectively carries out the oversight function Methodology manner Boards appointed and in which are Financial management control and processes.

and structures of and Ensure the 3.1.21 a implementation methodology and manner in which Boards are appointed to ensure independence enable effective board performance review with due consequence management.
3.1.22 Ensure that the financial management control structures and processes are such that accurate, timeous and reliable recording and reporting of all transactions takes place.

These following principles: That the appropriate financial and management controls are in place to ensure the effective management of the financial affairs.

financial systems should adhere and the That the financial affairs and is performance acceptable the corporate plans and shareholder compacts.
reported terms of in Significantly enhance reporting and accountability arrangements that facilitate an appropriate oversight by the Department; and Urgently technical develop capacity within the Department to oversee its SOCs.

12 20 4.

OVERVIEW AND ASSESSMENT OF FINANCIAL PERFORMANCE 4.1.

Financial performance 2022/23 Table 1 below provides a high-level comparison of 2021/22 versus 2022/23 expenditure incurred by the Department against appropriated funds.

Table 1.
Table 1.

Programme Expenditure Programme 2022/23 Name and Direct Charges Final Appropriatio n Actual (Over)/Und Expenditur er 2021/22 Final Appropriatio e Expenditure n Actual (Over)/Und Expenditur er e Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Administration .

SOCs Governance Assurance and Performance.


Business Enhancement, Transformation , and Industrialisatio n. Sub-total 34 145 398 33 888 457 256 941 36 274 819 36 027 190 247 629 Direct charges.

204 700 204 700 - 3 035 500 3 030 886 4 614 Total 34 350 098 34 093 157 256 941 39 310 319 39 058 076 252 243 Source: Department of Public Enterprises The Department spent 99.3% (R34 billion of R34.4 billion) of the final appropriation, of which R218 million was for Departmental operations.
The final appropriation was mainly composed of allocations to state-owned companies, namely Eskom - R21.9 billion, Transnet: R5.8 billion, Denel – R3.4 billion, and the SAA – R2.8 billion.

Eskom’s and SAA’s allocations were earmarked for repayment of debt while Transnet allocation of R2.9 billion was for repair of infrastructure damaged by the floods and R2.94 billion to accelerate repair and maintenance of long standing out of service locomotives.
Denel’s allocation was for implementing the turnaround plan.

The under expenditure of 13 21 R257 million primarily related to payments for financial assets, savings that were realised because of early settlement of guaranteed debt for South African Airways SOC Limited, projects that were executed internally, compensation to employees due to vacant posts and underspending on goods and services caused by delays in implementing some projects.
The programme has an appropriated budget of R168 010 million, of which R129 505 million or 77 per cent has been spent.

In this programme the Department underspent by R38.505 million.

The programme administration which has `underspent by high amounts were human resources, office accommodation and ministry.

4.2 Budget and Expenditure Summary Table 2 below provides a summary of the budget and expenditure for the first quarter of 2022/23.
R million Programme Main Appropria tion Availa ble Budge Q1 Actual expendit ure of Expendit ure as % Availabl e Budget Q1 Projecte d Expendit ure Disast er Spendi ng Variance from projecte d expendit ure % Variance from projecte d expendit ure 1.

165.4 165.4 34.8 21.0% 42.0 7.2 17.2% 0.0 Administration 2.
State- 65.6 65.6 13.9 21.2% 15.6 1.6 10.5% 0.0 owned Companies Governanc e Assurance and Performan ce 3. Business Enhancem ent, Transform ation, and 71.9 71.9 11.0 15.2% 15.5 4.5 29.2% 0.0 14 22 Industrialis ation Total 302.9 302.9 59.7 19.7% 73.1 13.4 18.3% 0.0 Source: National Treasury 15 23 4.2.1 Expenditure per programme The Department of Public Enterprises has an appropriated budget of R302.9 million for the 2023/24 financial year.
Actual expenditure at the end of the first quarter was 19.7 per cent or R59.7 million of the appropriated budget.

This translates to 18.3 per cent or R13.4 million lower than projections.

Lower than projected spending occurred on all programmes, with Programme 1: Administration having the highest variance followed by Programme 2: State‐owned Companies Governance Assurance and Performance.
At economic classification, expenditure was lower than projections on compensation of employees by R7.9 million and goods and services by R5.76 million, this was due to vacant posts and invoices not yet received during the period, however, they were paid in July 2023.

Programme 1: Administration: Expenditure was R34.8 million against projected spending of R42 million, resulting in a lower than projected spending of R7.2 million.
Lower than projected spending occurred on all subprogrammes except for the Chief Financial Officer and Office Accommodation subprogrammes which recorded overspending.

At economic classification, the lower than projected spending was on compensation of employees and goods and services.

This was due to vacant posts and the delayed receipt of invoices which were paid in July 2023.
The overspending on the Chief Financial Officer and Office Accommodation subprogrammes is attributed to increase in the number of auditors allocated to the department and annual increase in property lease.

Programme 2: State‐owned Companies Governance Assurance and Performance: Spending under the programme was R13.9 million against a projected budget of R15.6 million, this translates to underspending of R1.6 million lower than projections.
Although, there was overall lower than projected spending for the programme, there was significantly higher than projected spending on the Legal subprogramme.

This is due to is due to payment of invoices relating to 2022/23 financial year.

Programme 3: Business Enhancement, Transformation, and Industrialisation: Spending amounted to R11 million against projected spending of R15.5 million, resulting in a lower than projected spending of R4.5 million.
Underspending occurred on all subprogrammes and was mainly driven by compensation of employees because of vacant posts.

Expenditure on compensation of employees was R7.9 million lower than planned expenditure.

This was due to vacant posts in the department.

There is persistent underspending on compensation of 16 24 employees which has been on‐going for many years and the National Treasury has raised its concerns with the department regarding this issue.
The department indicated that there are various strategies being implemented to manage the vacancy rate.

4.3 Auditor General Report The Department received an unqualified audit with an emphasis of matter on the following: • Investments – the department has impairments of investments of R76, 592 billion (R70,5 billion), these are a reflection of changes in net assets positions of State-Owned Companies (SOCs).
• Contingent liabilities – were as follows: o The department has contingent liabilities of R371,24 billion (2022: R326,2 billion).

This includes funds guaranteed by government, which would be a direct charge against the National Revenue Fund as well as Governments’ commitments to settle state owned companies’ liabilities because of their continued financial constraints.
The auditors identified the following issues with regard to compliance with legislation: • Procurement and supply chain management – IT related goods and services, classified as mandatory, were not procured through SITA as required by Treasury Regulation 16A6.3(e) and section 7(3) of the SITA Act.
• Strategic planning– Specific information systems were not implemented to enable the monitoring of progress made towards achieving targets, core objectives and service delivery as required by public service regulation 25(1) (e)(i) and (iii).

The following matters were raised by the auditor regarding internal control deficiencies: • Management did not implement effective controls over the procurement of IT goods, as these were not procured through SITA.
• Management has not effectively prepared and monitored the preparation and reporting of performance indicators, which has led to material findings on this report.

4.4 Entities 17 25 The Department’s overall objectives are to provide an effective shareholder management system and to support and promote economic efficiency within each of the state-owned companies (SOCs).

The performance of SOCs has deteriorated in the period under review.
On 29 September 2023 the Minister of Public Enterprises wrote to the Speaker of Parliament with regards to late tabling of Eskom, South African Airways, Denel and Alexkor annual financial reports and audited annual financial statements (AFS) for the 2022/23 financial year.

The Minister outlined that Eskom, SAA, Denel have not been able to finalise and submit their respective annual reports to him within the prescribed timelines.
Eskom’s external auditors have identified matters that still need further investigation and/or attention.

Eskom anticipates that the AFS will be finalised during October 2023.

SAA has indicated that the audit has begun later than expected and may only be finalised after the outstanding audits for the previous financial years are completed.

Denel has indicated that the audit will be finalised in November 2023.
Alexkor will be holding its 2022 AGM to table its annual report and financial statements on Friday, 29 September 2023.

It has indicated that its 2023 external audit will be finalised in October and will endeavour to hold its AGM as soon as possible.

The only entities that submitted their annual reports and annual financial statements are SAFCOL and Transnet.

Below are expenditure estimates of all State-Owned Companies (SOCs).
4.4.1 Alexkor Alexkor was established in terms of the Alexkor Limited Act (1992) to mine marine and land diamonds in Alexander Bay, Northern Cape.

The outcome of the land and restitution award to the Richtersveld Community resulted in the formation of the Alexkor Richtersveld Mining Company Pooling and Sharing Joint Venture, wherein Alexkor holds a 51 per cent share interest on behalf of government, and the Richtersveld Community holds 49 per cent.
Alexkor does not have any other mining operations outside the joint venture.

Over the medium term, the company will focus on implementing the turnaround strategy for its diamond mining operations, which have significantly declined in the past 3 years.

Symptomatic of this was production averaging below 30 000 carats over the period and the company not 18 26 being able to reach the benchmark of more than 45 000 carats that had been achieved previously.
Some challenges to underproduction include a lack of funds to undertake exploration activities and maintenance of old infrastructure.

An immediate intervention is to seek mining contractors with the financial and technical capabilities to undertake large‐scale mining operations.

In the long term, Alexkor’s role should be determined in accordance with the challenges it faces.
To achieve this, the Department of Public Enterprises is conducting a study, which is expected to be completed in 2023/24, to determine the optimal shareholding structure for Alexkor.

This study will consider the current market characteristics of the diamond mining industry in relation to government’s developmental agenda.

The company was not able to submit detailed performance, expenditure, revenue and personnel data at the time of publication.
4.4.2 Denel Denel was incorporated as a private company in 1992 in terms of the Companies Act (1973), with the South African government as its sole shareholder.

It operates in the military aerospace and landward defence environment and provides strategic defence equipment.

The company’s broad focus over the medium term will be on implementing its turnaround plan, which entails rolling out its new operating model, restructuring and optimising its cost structure.
The new operating model reduces Denel’s structure from 6 core business units to 3 – engineering, manufacturing, and maintenance and overhaul.

This change will not only result in decreased expenditure, but in the improved allocation of critical resources.

It will also require that the company accelerate its disposal of non‐core assets and businesses, improve supply chain policies and align its IT infrastructure with its new organisational structure.
The company’s revenue decreased from R2.8 billion in 2020/21 to R1.5 billion in 2021/22 due to persistent liquidity challenges.

This was exacerbated by fixed costs and under‐recoveries across the group, resulting in the company continuing to be loss making, thereby eroding its solvency.

This, among other things, is related to the company having lost experienced personnel with critical skills over the years, which threatens its sustainability.
To fund the turnaround plan’s response to these challenges, the company expects to access funds through proceeds from the sale of non‐core disposals and shareholder recapitalisation.

To improve the company’s 2021/22 and 2022/23 balance sheets, government allocated R3.2 billion over that period to settle 19 27 guaranteed debt.

To augment this, government allocated an additional R3.4 billion in 2022/23 through the Special Appropriation Act (2022).
The cash injection will be used to implement the turnaround plan, settle legacy obligations and address the company’s liquidity requirements to support operations and execute its order pipeline.

The company was not able to submit detailed performance, expenditure, revenue and personnel data at the time of publication.

4.4.3 SAFCOL The South African Forestry Company was established in 1992 in terms of the Management of State Forests Act (1992).
It is mandated to ensure the sustainable management of plantation forests, increase downstream timber processing, and play a catalytic role in rural economic development and transformation.

The company contributes to approximately 1 772 direct jobs and more than 1 000 employment positions in small to medium companies through community projects and other services.
Over the medium term, the company plans to improve its performance by implementing its 50:50 revenue strategy, which entails plantation, processing and other businesses contributing equally.

The company will also focus on increasing its processing capacity through upgrading the Timbadola processing plant in Limpopo.

This will reduce operating costs at the plant, particularly for repairs and maintenance.
Expenditure is expected to increase at an average annual rate of 8.4 per cent, from R1.4 billion in 2022/23 to R1.8 billion in 2025/26.

The operations of Komatiland Forests, the company’s main revenue‐generating division, constitutes 80.7 per cent of total expenditure over the MTEF period.

Overall, spending on goods and services constitutes 72.6 per cent (R3.7 billion) of the company’s budget, while compensation of employees’ accounts for 22.8 per cent (R1.3 billion) over the next 3 years.
The company derives most of its revenue from the sale of sawlogs and lumber.

Revenue is expected to increase at an average annual rate of 10.1 per cent, from R1.5 billion in 2022/23 to R2 billion in 2025/26, due to an anticipated higher demand for the company’s products over the medium term.

In 2021/22, the company reported R1.2 billion in revenue, a 33 per cent increase from the R920.8 million realised in 2020/21.

The increase was due to a favourable log and lumber market.
Following years of losses, the company reported a profit of R83.6 million and declared 20 28 a R1 million dividend at its 2022 annual general meeting.

The company’s fixed costs remain high, something it plans to monitor over the period ahead to remain profitable.

Liquidity and solvency positions remain strong, and the company is not highly indebted.

As such, it is in a position to raise funds on the strength of its balance sheet without government support.
4.4.4 Eskom Eskom is mandated to generate, transmit and distribute electricity to industrial, mining, commercial, agricultural and residential customers and redistributors.

Significant progress has been made on the company’s legal separation into 3 subsidiaries: transmission, generation and distribution.

In this regard, the National Transmission Company of South Africa was corporatised in December 2021, and will be operationalised once the National Energy Regulator of South Africa issues its licence.
The National Electricity Distribution Company of South Africa is expected to be corporatised during 2023/24.

The company’s new board was appointed in October 2022 and has been tasked with ensuring a performance turnaround for operations.

This is expected to result in improving energy availability from 58 per cent as at 30 September 2022 to 66.5 per cent by 2025/26.
The current low availability of energy is due to high unplanned breakdowns and unit trips, which account for 30.8 per cent of the company’s non‐availability of generation capacity.

To improve operational performance, the board is working with the national energy crisis committee, which was established by the president in July 2022.

The committee’s purpose is to oversee the implementation of an action plan to end load shedding and achieve energy security in the country.
As part of the company’s build programme, the Kusile power station is expected to be completed in May 2024.

Interventions and modifications to repair construction defects at the Medupi and Kusile power stations are expected to be completed by the end of 2023.

This includes the recent failure of the flue‐gas ducting that has impacted units 1 to 3 of the Kusile power station.
To support the transition from coal to renewable energy, in line with government’s energy policy, Komati power station was shut down on 31 October 2022 and is being repurposed with renewable energy technologies that will supply clean electricity to the economy and the public.

21 29 Based on the company’s 2022/2023 to 2026/27 financial plan, expenditure is projected to increase at an average annual rate of 5.4 per cent, from R299.6 billion in 2022/23 to R351.1 billion in 2025/26.
Generation is Eskom’s main cost driver, constituting 59.7 per cent (R570.6 billion) of its total budget over the medium term.

Spending on goods and services across divisions constitutes 61.5 per cent (R604.1 billion) of the company’s budget.

Revenue is expected to increase at an annual average rate of 8.9 per cent, from R279.5 billion in 2022/23 to R361.3 billion in 2025/26.
Revenue is mainly derived from the sale of electricity, which increased by 2.1 per cent, from R204.5 billion in 2020/21 to R247 billion in 2021/22, due to a regulatory tariff increase of 15.1 per cent imposed on customers supplied directly by Eskom.

Revenue in 2022/23 is projected to increase to R279.5 billion, driven by a 9.61 per cent tariff increase.

The company’s net loss is projected to increase to R20 billion in 2022/23, worsening from the R12.3 billion reported in 2021/22.
Net debt decreased by R11.7 billion to R389.1 billion in 2021/22, while municipal arrears amounted to R44.89 billion in 2021/22 and are expected to increase to R57.7 billion in 2022/23.

As such, Eskom’s financial position remains weak and the company is not able to generate enough cash from operations to cover debt obligations.

Given this weak financial position, government has committed an additional R21.9 billion in 2022/23 to assist with the company’s debt‐service obligations.
4.4.5 Transnet Transnet provides and operates freight transportation services and infrastructure.

The company’s key strategic objectives include improving logistics competitiveness, promoting a modal shift from road to rail, increasing logistics connectivity, attracting private investment, developing skills and promoting reindustrialisation.
To sustain and expand its capacity, over the 5‐year period ending in 2026/27, Transnet planned to invest R99 billion, 44.5 per cent (R44 billion) of which was earmarked to be invested in the rail sector, another 44.5 per cent (R44 billion) at ports and 6 per cent (R6 billion) on pipeline infrastructure.
However, these investments were hindered due to the company having to reduce capital expenditure in 2022/23 by 9.2 per cent, from R18 billion to R16.4 billion, because of liquidity constraints associated with limited profitability.

22 30 Significant turnaround in operations, and as such the company’s financial position, in the short term have been impacted by events such as severe damages at the port of Durban and along the KwaZulu‐ Natal rail corridor due to flooding in the province in April 2022.
To assist the company with repairs, government allocated R2.9 billion in 2022/23 through the Special Appropriation Act (2022).

To assist with clearing the backlog in its infrastructure build, maintenance and modernisation programme, Transnet is actively seeking private sector participation in its operations.

Investment from the private sector is also expected to contribute to the migration from road to rail, with the aim of reducing the total national cost of logistics.
The Department of Public Enterprises is working with Transnet to develop a turnaround plan that will address various operational and infrastructure funding challenges.

Expenditure is expected to increase at an average annual rate of 2.5 per cent, from R81.3 billion in 2022/23 to R87.6 billion in 2025/26.

Over the period ahead, Transnet Freight Rail operations constitute 59 per cent (R152.7 billion) of total expenditure.
Overall, spending on compensation of employees constitutes 34.4 per cent (R86.5 billion), while goods and services constitutes 29.3 per cent (R75.9 billion) and provision for depreciation accounts for 18.5 per cent (R46.7 billion).

Transnet derives most of its revenue from freight, port and pipeline operations, amounting to 97.6 per cent (R261.7 billion) of total revenue.

Revenue is expected to increase at an annual average rate of 4.2 per cent, from R83.9 billion in 2022/23 to R95.1 billion in 2025/26.
The relatively low revenue growth was offset by cost savings and significant fair value adjustments.

The latter was linked to the reversal of previous downward valuations during the COVID‐19 pandemic.

As a result, the entity reported a net profit of R5 billion in 2021/22 compared to a loss of R8.4 billion in 2020/21.

4.4.6 South African Airways South African Airways operates a full‐service network in the international, regional and domestic markets.
The airline is responsible for promoting air links with South Africa’s key business, trading and tourism markets across the world, and contributing to key domestic air linkages.

The company was placed under business rescue in December 2019 and exited the process in April 2021.

It resumed operations in September 2021, operating domestically and regionally, 23 31 and has since been operating 6 aircraft.
Over the MTEF period, the airline plans to increase its operations and improve its service offering, for example, by expanding its route network.

Government is in the process of concluding the sale of its majority shareholding in the company to a strategic equity partner.

This is expected to attract the funding and skills required to strengthen the airline’s balance sheet and improve its operations.
The partnership was expected to be finalised by the end of 2022/23, but due to outstanding matters such as regulatory approvals from the Competition Commission and the Air Services Licensing Councils, it is expected to be concluded in 2023/24.

Expenditure is expected to increase at an average annual rate of 50.8 per cent, from R4.6 billion in 2022/23 to R15.9 billion in 2025/26.

This significant increase is attributed to an increase in operations with the lifting of COVID‐19 restrictions.
Spending on goods and services constitutes 87.2 per cent (R32 billion) of total expenditure, mainly driven by fuel, leases and maintenance costs.

Revenue is expected to increase at an annual average rate of 62.8 per cent, from R3.9 billion in 2022/23 to R16.6 billion in 2025/26.

It is mainly derived from the sale of air tickets, which constitutes 99.7 per cent of total revenue.

This significant increase is attributed to the airline’s anticipated increase in operations.
4.5 Department of Public Enterprises’ financial performance for 2022/23 The Department spent 99.3% (R34 billion of R34.4 billion) of the final appropriation, of which R218 million was for Departmental operations.

The final appropriation was mainly composed of allocations to state-owned companies, namely Eskom - R21.9 billion, Transnet: R5.8 billion, Denel – R3.4 billion, and the SAA – R2.8 billion.
Eskom’s and SAA’s allocations were earmarked for repayment of debt while Transnet allocation of R2.9 billion was for repair of infrastructure damaged by the floods and R2.94 billion to accelerate repair and maintenance of long standing out of service locomotives.

Denel’s allocation was for implementing the turnaround plan.
The under expenditure of R257 million primarily related to payments for financial assets, savings that were realised because of early settlement of guaranteed debt for South African Airways SOC Limited, projects that were executed internally, compensation to employees due to vacant posts and underspending on goods and services caused by delays in implementing some projects.

24 32 The cases of irregular expenditure have increased from R 35.6 million in 2021/22, to R 38.7 million as at the end of March 2023.
These irregular expenditures cases were due the to contravention of Supply Chain Management (SCM) processes.

Programme 1: The programme has an appropriated budget of R168 010 million, of which R129 505 million or 77 per cent has been spent.

In this programme the Department underspent by R38.505 million.

The programme administration which has underspent by high amounts were human resources, office accommodation and ministry.
Programme 2: The programme has an appropriation budget of R60 591 million of which R42 048 million or 69% per cent of the budget was spent.

Programme 3: The programme has an appropriated budget of R34.1 billion of which R33.9 billion or 99.4 per cent of the budget was spent by the end of the financial year.

The main cost driver in the programme is payments for financial assets for the recapitalisation and settlement of debt of the state-owned companies.
In the current financial year, allocations to SOCs comprised of: Eskom - R21.9 billion, Transnet- R5.8 billion, Denel – R3.4 billion, and SAA –R2.6 billion.

Eskom’s and SAA’s allocations were earmarked for repayment of debt while Transnet allocation of R2.9 billion was for repairs of infrastructure damaged by floods and R2.94 billion to accelerate repair and maintenance of long standing out of service locomotives.

Denel’s allocation was for implementing the Turnaround Plan.
4.7 Concluding comments on financial performance.

The Department is financially sound as exhibited by achieving unqualified audit opinions over the years, although findings were found with regards to investment and contingent liabilities.

Matters pertaining to compliance with legislation and internal control deficiencies were also raised.

This can be seen as a regression of the previous year’s findings.
The department’s budget has been dominated by transfers to the SOCs, which has skewed the department’s budget.

The department has spent 99.3 per cent of its budget.

However, the underspending on its operational budget was due to vacant posts and delays in the commencement of planned projects.

The department should try to correct this trend by looking at its planning mechanisms.

25 33 The future role of Alexkor will have to be confirmed with the continued stabilisation of their long- term planning.
Denel was historically unable to meet some of its financial commitments i.e., creditor and salary payments, tax duties and debt obligations (resulting in Government stepping-in for guaranteed debt totalling R3.241billion to date) despite recapitalisations and government guarantees provided.

Denel’s new turnaround plan comprises of disposing non-core assets, consolidating core capabilities, and achieving growth through collaboration, amongst others.
The turnaround plan has a funding requirement of R5.203 billion, of which Denel committed to raise circa R1.8billion through the disposal of identified non-core assets.

Therefore, it was announced during the 2022/23 Medium- Term Budget Policy Statement (MTBPS) that Denel will be allocated R3.378 billion, subject to meeting certain pre-and post-disbursement conditions, and a Special Appropriation Act 2022 (18 of 2022) was finalised.
To date, Denel has been unable to finalise any other asset-disposal apart from unlocking the surplus funds from the Denel Medical Benefit Trust (DMBT).

However, this is also a result of stakeholder misalignment in the defence industry, given that the anticipated Memorandum of Co-operation (MoC) to outline alignment on the identified sovereign and strategic capabilities, including the funding thereof, has been delayed and still not finalised to date.
Eskom’s profitability remains hampered by poor long-term financial sustainability arising from an inadequate tariff path, poor generating plant performance, escalating arrear municipal debt as well as high debt servicing costs.

Transnet Freight Rail operations have been negatively impacted by ongoing security incidents, locomotive unavailability and the poor state of the rail infrastructure.
The decline in freight rail is because of a confluence of factors which amongst others include operational inefficiencies; theft and vandalism; and under investment in the network.

With regards to SAA, the Minister of Finance allocated R1 billion in the February 2023 budget for the settlement of outstanding business rescue obligations.

The allocation to SAA was subject to several conditions which the airline has made progress regarding compliance: i.
Funds are specifically and exclusively appropriated to settle outstanding business rescue plan obligations.

ii.

All government guarantees to SAA will be cancelled upon disbursement of funds.

iii.

Takatso Consortium, to provide proof of funds for the Strategic Equity Partnership (SEP) transaction prior to its conclusion.

26 34 iv.

National Treasury will conduct a review of the SEP agreement to ensure it does not give rise to future fiscal obligations.
v. SAA will continue to identify and dispose of non-core assets including implementing sustainable cost cutting initiatives which must be included in the monthly reports to the National Treasury.

vi.

No incentive bonus pay-outs to executives during the period prior to the conclusion of the SEP transaction.

vii.

The Shareholder Compact must be finalised in consultation with the Minister of Finance, before it is approved; and viii.
Within 30 days after the end of each month, SAA should provide monthly updates which must include, inter alia, forecast cash flows, revenue generation, profit and loss statement, statement of financial position.

5.
5.

OVERVIEW AND ASSESSMENT OF SERVICE DELIVERY PERFORMANCE 5.1 Service Delivery Environment for 2022/23 The Department is the interface between Government and State-Owned Companies (SOCs) within its portfolio, and it continues to support and provides its contributions into the legislation and policy formulation to the Policy Departments and other spheres of Government.
In executing its responsibilities, the Department seeks to direct and support improvements in the financial, commercial and operational performance of these Entities and their contribution to the wealth of the South African economy.

The efforts to drive SOCs into a divergent future after the damage caused by state capture and corruption, both which had a significant impact on the SOC’s Governance, operations and finances, were given precedence to change the status quo.
The work of the Presidential State-Owned Enterprise Council (PSEC) has gained momentum with one of the key recommendations being introduced towards a new State ownership model for key commercial State-Owned Enterprises (SOEs).

This is to address the fragmentation in the current hybrid Government Shareholder oversight model.
The PSECs work included in-depth analysis and determination of SOEs that should be consolidated and those that should be disposed of, repurposing 27 35 those consolidated SOEs, development of criteria for SOEs that should be part of crisis management and stabilisation of the SOEs that are under crisis management.

The Department’s services have no direct influence on citizens, however, the services provided by the SOCs under the DPE portfolio have a direct impact on South African citizens.
5.2 Performance Information by Programme 5.2.1 Performance analysis The Department is primarily contributing to creating an efficient, competitive and responsive economic infrastructure network (Outcome 6) of the Medium Term Strategic Framework (MTSF).
Furthermore, the Department, through the activities of its SOCs, contributes to other outcomes such as decent employment through inclusive growth (Outcome 4), a skilled and capable workforce to support an inclusive growth path (Outcome 5) and a vibrant, equitable and sustainable rural communities with food security for all (Outcome 7).

The Department, over the medium term will continue to oversee its seven SOCs.
Furthermore, over the medium term, the department will continue to focus on enhancing reforms to stabilise SOCs’ and strengthening its oversight capacity to ensure that the SOCs in its portfolio are sustainable and contribute to investment in key infrastructure.

The Department tabled its Annual Performance Plan (APP) 2022/23 submitted to the Committee.

It has achieved on most of its planned activities according to the report.
5.3 Programme and sub-programme performance The Department has three programmes.

The performance against targets is given below.

5.3.1 Programme 1: Administration and Corporate Management The purpose of this programme is to provide strategic management and support services to the Department.
28 36 The programme is currently made up of the following sub-programmes: Ministry, Office of the Director-General/Management; Security and Facilities Management; Information Management and Technology; Office of the Chief Financial Officer; Human Resources; Communications; Strategic Management; and Internal Audit.

Table 3 Administration and Corporate Management Outcome Output Indicator Actual Achievement 2022/23 Reason Deviation for Planned Annual Target 2022/23 8% Vacancy rate reduced.

Not achieved.
Not achieved.

Vacancy rate was reduced by 0.5%.

Percentage of vacancy rate reduced Promote alignment and efficiency across institutional model.

signed Percentage on Performance Management achieved as per individual Performance Agreements linked to the APP and AOP targets.

Percentage on implementation of Corporation agreement to reduce SOCs infrastructure vandalism through signing Corporation with Stakeholders.

Percentage on media public perception survey achieved.
80% Achievement as per individual Performance Agreements linked to the and APP AOP targets.

50% of the Corporation agreement milestone achieved.

Achieved.

80% Of individual Performance Agreements linked to the APP and AOP targets was achieved.

Not achieved.

0% Corporation agreement milestone achieved.

30% Improvement against the baseline achieved.

Not achieved.

0% Improvement against the baseline achieved.

Due to high staff turnover, the vacancy rate was not reduced by 8%.
None Transnet MoU was not signed.

The improvement of public media perception was undertaken by the Government Communication and Information System (GCIS).

DPE does not have the 29 37 Improved ICT and business alignment and enhanced oversight function.

Percentage on improvement of ICT infrastructure services and 90% of systems availability maintained.

90% Systems availability maintained Achieved.

An average of 99.80% systems availability was maintained.

90% of ICT structure populated.


Percentage on population of ICT Structure with new capabilities.

Not achieved.

88% of ICT structure populated with new capabilities (8 Funded posts exist on the structure of which 7 are filled).

Source: Department of Public Enterprises Annual Report 2022/23 capacity of managing public perception.

The achievement was based on comprehensive ICT services.

No baseline was available for the previous year, hence the actual performance vs the planned may seem over stated.
Priority was given to the Director: IM post to address an audit finding.

The programme has two outcomes as follows; promote alignment and efficiency across institutional mode and improved ICT and business alignment and enhanced oversight function.

The first outcome has four indicators, out of the four outcome indicators three were not achieved.
There was non-achievement in the following outcome indicators: percentage of vacancy rate reduced, percentage on implementation of signed corporation agreement to reduce SOCs infrastructure vandalism through signing corporation with stakeholders and percentage on media public perception survey achieved.

The department continues to experience high staff turnover.

There is high vacancy rate in senior management which is at 35.6%.
The second outcome with the output indicator on percentage population of ICT structure with new capabilities was not achieved.

30 38 5.3.2 Programme 2: State-Owned Companies Governance Assurance, Legal Assurance, Risk Profiling and Mitigation The purpose of this programme is to provide and enforce SOCs’ governance, legal assurance, financial and non-financial performance monitoring, evaluation and reporting systems, in support of the Shareholder, and to ensure alignment with Government’s priorities.
Table 4 Sub-programme: Governance, Legal Assurance, Risk Profiling and Mitigation Outcome for Output Indicators Planned Annual Targets 2022/23 Reasons Deviation Improved Governance And Accountability.

Government Shareholder Management Bill (GSMB) adopted into law by 2023.

Report on activities and recommendations of PSEC.

Bill to SOE submitted Cabinet and Parliament.

Annual PSEC Report on activities and recommendations.

Number of Governance Tools (MoI) revised and approved.
and Denel Alexkor MoIs revised and approved.

Actual Achievement 2022/23 Not achieved.

SOE Bill was not submitted to Cabinet and Parliament.

Achieved.

Annual PSEC Report on activities and recommendations was finalised.

Not achieved.

Denel and Alexkor MOIs revised and not approved.

Further consultation on the Bill required.

None.

The approval process was delayed due to further consultation required on the certain MoI clauses.

None.

Centre of Excellence on Governance established.


Governance Centre of Excellence on Governance Established Achieved.

Governance Centre of Excellence on Governance Source: Department of Public Enterprises Annual Report 2022/23 The department achieved two out of four output indicators in this sub-programme.

There is a need for the department to improve on the achievement of targets by the department.

This reflects on the planning and capacity of the department to execute on planned targets.
Table 5 Sub-programme: Financial Assessment and Investment Support Outcome Outcome Indicators Planned Annual Actual Achievement 2022/23 Reasons Deviation for 31 39 Improved independent financial sustainability of SOCs Targets 2022/23 FY Report on preferred option to resolve Eskom debt.

seeking SEP Guidelines for SOC (either majority or minority) Shareholding approved.

SOCs’ Business Plan developed and restructuring unit established.

Two Progress Reports SOCs findings.


on audit 100% Assessment Compliance Reports received.

Achieved.

Report on preferred option to resolve Eskom debt was finalised.

Achieved.

Guidelines for seeking SOC SEP (either majority or minority) Shareholding was approved.

Not achieved.

SOCs Business Plan was not developed, and the restructuring unit was not established Achieved.

Two Progress Reports on SOCs audit findings completed.

Achieved.

100% Assessment of all reports received.

were None None.
were None None.

Framework was developed as a guide for the restructuring process.

None.

None.

Four DPE and SOC CFOs’ forums to be held quarterly Achieved.

Four DPE and SOC forums were held quarterly.

CFOs’ None.

on Report preferred option to Eskom debt.

resolve Guidelines in SOCs seeking SEP and evaluating Shareholding i.e., majority and minority Shareholding approved.

Number SOCs’ Business Plans developed and restructuring unit established.

Number of Progress Reports on SOCs audit findings.


of % On SOCs compliance reporting (i.e., CP, Quarterly Reports, PFMA section 66 applications).

Number DPE and CFO’s forums quarterly.

SOC held of Source: Department of Public Enterprises Annual Report 2022/23 32 40 The department states that the restructuring framework will provide guidance on the process to reposition of SOEs as effective instrument of economic development as part of the work undertaken by PSEC.
The department achieved five out six output indicators in this sub- programme.

5.3.3 Programme 3: Business Enhancement and Industrialisation The purpose of the programme is to provide sector oversight to ensure that state-owned companies contribute to the advancement of industrialisation, transformation, intergovernmental relations and international collaboration services.

The programme will also support the shareholder in strategically positioning and enhancing the operations of state-owned companies.
Through this programme, the Department contributes to the enhancement of the performance of SOCs on an ongoing basis by: • Conducting reviews, research and modelling of pipeline and new business enhancement opportunities within SOCs; • Assessing operations of SOCs and developing mitigation instruments in conjunction with policy departments, regulatory bodies and industry; and • Conducting research, modelling job creation and transforming instruments for SOCs to inform compact alignment imperatives, promote SOCs’ contribution to inclusive economic growth, unlock bottlenecks affecting SOCs and inform evidence-based policy formulation.
Table 6 Programme: Business Enhancement Services Outcome Output Indicators Planned Annual Targets 2022/23 FY Gender responsive plan developed and approved.

Actual Achievement 2022/23 FY Achieved.

Gender responsive plan was developed and approved.

Reasons deviations for None.

Increase the contribution of SOCs to support transformation of the South African economy.

Number of Gender Responsive Plans approved and implemented.

% On SOC Public 12% On Public procurement Achieved.
16.35% Department facilitated 33 41 the elevation of SOC procurement support of WO businesses.

None.

procurement spent on WO businesses.

spent on WO businesses.

SOCs Local Content verification framework developed and tested.

Local content verification framework developed and testing with two capital programmes in partnership with SABS.

On Public procurement spent on WO businesses was met.

Achieved.
Achieved.

Local content verification framework developed and testing with two capital programmes in partnership with SABS was finalised.

Source: Department of Public Enterprises Annual Report 2022/23 The department achieved all its indicators in this sub-programme.

Table 7 Sub-programme: Energy and Resources Outcome Output Indicators Actual Achievement 2022/23 FY Reasons deviations for Improved Governance and accountability.

Shareholder Compact (SHC) signed.

Supply of Energy Secured.


Increased EAF factor to above 80% by 2024.

Eskom Planned Capacity Adherence Planned Annual Targets 2022/23 FY One 2023/24 SHC signed (Eskom).

Not achieved.

2023/24 SHC was not signed (Eskom).

Monitor implementation of Eskom’s interventions to increase energy availability to above 70% by 2022/23.

Four Progress Reports on Eskom’s delivery of Achieved.

Implementation of Eskom’s interventions to increase energy availability to above 70% by 2022/23 was monitored.

Achieved.
Achieved.

Four Progress Reports on Eskom’s Finalisation of the SHC was delayed due to prolonged engagements to ensure alignment between the Department and SOC.

None.

None.

34 42 (Infrastructure/ Build Programme).

Increased electricity reserve margin by 15% by 2024.

Eskom’s Roadmap for reformed electricity supply industry implemented (unbundling process: Transmission, Generation and Distribution).

Number of reports on the maintenance of the energy levels.
Number of Progress Reports on additional 1000 MW commissioned by 2024 produced.

Signed SHC per year (SAFCOL).

Signed SHC per year (Alexkor).

Improved Governance and accountability.

infrastructure programme.

15% Reserve margin achieved.

Corporatisation of Distribution and Generation companies finalised.

delivery of infrastructure programme completed Not achieved.

15% Reserve margin not achieved.

Not achieved.

Corporatisation of Distribution and Generation companies not finalised.
Reserve margin was below 15% due to low EAF factor.

The process of corporatising Distribution and Generation is still underway.

Four reports on KNPP life extended.

Four Progress Reports on additional embedded generation capacity added.

SHC signed (SAFCOL).

SHC signed (Alexkor).

Achieved.

Four reports on KNPP life extended were completed.

Achieved.

Four Progress Reports on additional embedded generation capacity added were completed.

Achieved.

SHCs was signed (SAFCOL).

Not Achieved.


SHC was not signed (Alexkor).

None.

None.

None.

Finalisation of the SHC was delayed due prolonged engagements to ensure alignment between the Department and SOC.

35 Source: Department of Public Enterprises Annual Report 2022/23 43 The Department of Public Enterprises out of the nine output indicators in this sub-programme failed to achieve on four output indicators.

The shareholder’s compact of Eskom and Alexkor were not signed.
Output to increase electricity reserve margin by 15% by 2024 could not be achieved due to low electricity availability factor.

Eskom’s Roadmap for reformed electricity supply industry implemented (unbundling process: Transmission, Generation and Distribution) was not achieved.

Table 8 Sub-programme: Transport and Defence Outcome Output Indicators Planned Targets 2022/23 FY Improved Governance and accountability.

Signed SHCs per year (Transnet).

One 2023/24 SHC signed (Transnet).


Actual Achievement 2022/23 FY Not achieved.

2023/24 SHC was not signed by (Transnet).

Implementation of the agreed decision of Government on the structure and functions of TNPA.

% Increase of rail friendly commodities moved from road to rail by TFR (6.2 million.

tons by 2023/24).

NPA establishment as a subsidiary of Transnet.

Not achieved.

NPA was not established as a subsidiary of Transnet.
10% Improvement of rail friendly commodities moved from road to TFR, not less than 2,12mt.

Not achieved 10% Improvement of rail friendly commodities moved from road to TFR was not met.

Reason deviation for SHC was not finalised due to further engagement with Transnet, NT and the DoT to ensure alignment of Key performance Areas (KPAs)/Key performance Indicators (KPIs).

PFMA section 51 (1)(g) application not yet submitted.
Improvement of rail commodities from road to rail was negatively impacted by, amongst others, theft and vandalism of infrastructure, 36 44 rolling stock and shortage of locomotives Transaction milestones were not met due to business cases still being considered Engagements took longer than anticipated None.

Number of PSP transactions in ports and rail identified.

PSP in ports and freight rail on 13 transactions identified.

Not achieved.

PSP in ports and freight rail on five transactions were identified.
Not achieved.

Proposal framework for the Shareholder Oversight Model for SOCs with a minority Government Shareholding was not developed.

Achieved.

Four Mapping Reports with options to restore or preserve the core industrial Defence capabilities for four Denel divisions, namely Pretoria Metal Pressings, Denel land Systems, Denel Dynamics Missiles, Denel Aeronautics Maintenance, Repair and Overhaul were completed.

Improved Governance and accountability.


Improved independent financial sustainability of SOCs.

Framework for the Shareholder Oversight Model for SOCs with a minority Government Shareholding developed Number of reports on mapping of industrial defence capabilities and options for Denel divisions.

Number of Diagnostic Reports on the root causes to the challenges Framework for the Shareholder Oversight Model for SOCs with a minority Government Shareholding developed.
Four Mapping Reports with options to restore or preserve the core industrial Defence capabilities for four Denel divisions, namely Pretoria Metal Pressings, Denel land Systems, Denel Dynamics Missiles, Denel Aeronautics Maintenance, Repair and Overhaul.

Diagnostic Report on the root causes to the challenges of the Denel None.

Achieved.

Diagnostic Report on the root causes to the challenges 37 45 of the Denel Badge/ Hoefyster contract and lessons produced.
Number of quarterly reports update on the implementation of the Defence and Aerospace Masterplan.

Badger/ Hoefyster contract and lessons produced.

Four quarterly reports on the implementation of the Defence and Aerospace Masterplan (Progress made and interventions required).

of the Denel Badger/Hoefyster contract and lessons produced was finalised.

Achieved.

Four quarterly reports on the implementation of the Defence and Aerospace Masterplan were completed.

None.
None.

Source: Department of Public Enterprises Annual Report 2022/23 The department in this sub-programme outlined eight output indicators.

Out of the eight it failed to achieve on the five output indicators.

The non-achievement was mostly in transport in particular the output indicators linked to Transnet.

The department did not sign Transnet shareholder’s compact.
Shareholder’s compact was not finalised due to further engagement with Transnet, NT and the DoT to ensure alignment of Key Performance Areas (KPAs)/Key Performance Indicators (KPIs).

TNPA was not established as a subsidiary of Transnet.

10% improvement of rail friendly commodities moved from road to TFR was not met.

Five transactions out thirteen PSP in ports and freight rail were identified.
5.4 Concluding Comments on Service Delivery Performance The Department is crucial in the development of the overarching policy on SOCs.

In its reporting to the Committee, the Department stated that the work of the Government Shareholder Management Bill is outstanding due to the processes initiated at the Presidential State-Owned Enterprises Council (PSEC).
The Council’s mandates strengthening the framework governing SOEs including the introduction of an overarching Act governing SOEs and the determination of an appropriate Shareholder Ownership Model.

The timelines for the Shareholder Management Bill have been deferred to 2023.

However, SOE bill requires further consultation.

The department still experience high vacancy rates due to high staff turnover, the vacancy rate was reduced by 8%.
Concluding shareholder compacts remain a challenge for the Department.

The shareholder compacts for Eskom, Alexkor, Transnet, SAA and Denel were not concluded.

This makes it difficult for the 38 46 Department to provide oversight to these entities as there are no agreeable terms set to monitor SOCs’ performance.

The Shareholder’s Compact represents the agreement between the Executive Authority and the Accounting Authority.
It reflects the expectations of each party, expressed in terms of outcomes and outputs that need to be achieved.

The Shareholder’s Compact needs to be reviewed and adjusted on an annual basis, in line with the performance of the Public Entity over the previous financial year.

6.
6.

SERVICE DELIVERY AND FINANCIAL ASSESSMENT The Department has adopted clear goals and targets over the medium-term period, driven by the National Development Plan (NDP) and Medium-Term Strategic Framework (MTSF) and Economic Recovery and Reconstruction Plan (ERRP).

The Department’s strategy has been designed to ensure that the SOCs under the DPE portfolio fulfil their roles in supporting the attainment of the objective outlined in Government’s key priority documents as stated above.
The capacity and capability within the Department therefore plays an important role in facilitating the efficient delivery of the strategic outcomes.

It is important that the department improve on its planning and reporting processes in line with recommendations of the Auditor General.

The Department has identified a set of initiatives focusing on providing strategic oversight to the SOCs.
These include: • The interactions across the institutional model in terms of National Policy deliverables that requires collaboration with various Stakeholders and alignment between Policy, Regulation, and Shareholding to improve accountability.
The institutionalisation of the Inter- Governmental engagements through various oversight tools namely the Strategic Intent Statement (SIS), and Shareholder Compact (SHC) are enablers to unlock bottlenecks within the system to improve the execution of key priorities.

• The standardisation approach in terms of shareholder oversight within Government requires the development of the National Enterprise Bill (NEB) which is currently underway.
The Bill is aimed at supporting the objectives of strengthening and harmonising the current institutional architecture.

To date, significant progress has been made towards the development of the overarching Act governing SOEs.

During the year under review, the Policy Statement that provides the base for the adoption of the centralised model was finalised.

39 47 Public consultation on the Bill is ongoing and will be submitted to Parliament when the consultation process has been concluded.
• During the year under consideration, the Department has pro-actively been involved in engaging and addressing emerging issues that continue to threaten the achievement of the National development objectives.

This is mainly to ensure that there is progress made by the SOCs and ensuring their commitment and contribution towards economic growth.

The Department spent 99.3% (R34 billion of R34.4 billion) of the final appropriation, of which R218 million was for Departmental operations.
The final appropriation was mainly composed of allocations to state-owned companies, namely Eskom - R21.9 billion, Transnet: R5.8 billion, Denel – R3.4 billion, and the SAA – R2.8 billion.

Eskom’s and SAA’s allocations were earmarked for repayment of debt while Transnet allocation of R2.9 billion was for repair of infrastructure damaged by the floods and R2.94 billion to accelerate repair and maintenance of long standing out of service locomotives.
Denel’s allocation was for implementing the turnaround plan.

7.

OBSERVATIONS The Committee made the following observations: 7.1 Acknowledged and raised concern that four entities had not submitted their annual reports and annual financial statements at the time of the processing of the Budgetary Review and Recommendations Report.

These entities include Alexkor, Denel, South African Airways and Eskom.
7.2 Noted the announcement by the President of the Republic of South Africa that the Department of Public Enterprises will be disbanded at the end of the 6th administration.

7.3 Noted the dismal performance against targets for the Department of Public Enterprises and Transnet.

However, acknowledged and commended Safcol for the sterling work done in terms of achieving an unqualified audit and good performance against targets.
7.4 Noted that overall, there has been a decline in Transnet’s performance, as the entity did not achieve the majority of their planned performance targets for the period under review.

The entity only managed to achieve 26.32% of its annual targets in the current year when compared to 38.64% achieved in the prior year.

This represents a 12.32% decline in performance in the period under review relative to the prior year.
7.5 Noted that Transnet has not achieved on the planned service delivery and efficiencies relating to its mandate of assisting in lowering the cost of doing business in South Africa, 40 48 enabling economic growth and security of supply through providing appropriate ports, rail and pipeline infrastructure as well as operations in a cost effective and efficient manner within acceptable benchmark standard.
The non-achievement of planned targets further contributed to increased reliance on road transportation, leading to higher costs, road congestion, damage to road infrastructure and negative environmental impacts.
7.6 Noted that the main root causes for non-achievement are attributed to operational challenges due to non-availability of rolling stock, security incidents, strike action, power outages, customer cancellations and adverse weather conditions and equipment challenges as well as delays in concluding request for proposals with the private partnerships.
7.6 Noted that the Committee was not involved nor consulted when strategic decisions were taken to dispose of state-owned assets or shares, and only learned of the decision after the effect.

Further noted that there is a need to strengthen the oversight efforts of the Committee to curb such adverse decisions from happening.

8.
8.

RECOMMENDATIONS 8.1 The Committee recommends that the Minister of Public Enterprises should: 8.1.1 Expedite the implementation of the Zondo Commission recommendations to ensure that the offenders are dealt with and where necessary the misappropriated resources are recovered.

This process must be finalised before the disbandment of the Department of Public Enterprises.
8.1.2 Ensure that there is a target set for the monitoring of the Boards of SOCs in line with the Board Performance Evaluation Framework.

8.1.3 Ensure that Alexkor is stabilised and critical vacancies are filled, which include Chief Executive Officer, Chief Financial Officer, Board Members, and operational staff.

These vacancies have prevented the entity from realising its objectives and the sustainability of Alexkor is at risk.
8.1.4 Expedite the development and implementation of the regulatory framework on disposal of shares in state-owned companies.

8.1.5 Finalise the shareholder oversight model for SOCs with minority government shareholding before the end of the 2023/24 financial year.

41 49 8.1.5 Ensure that the Department set targets in the annual performance plan for participation of its SOCs in the relevant Districts & Metropolitans District Development Model Technical Committees.
8.1.6 Finalise and implement the SOCs reforms that have been announced by government, including the Government Shareholder Management Bill and SOE funding criteria.

8.1.7 Ensure that the DPE’s annual performance plan be aligned to the MTSF targets of strengthening governance systems and ensuring board stability.
8.1.8 Improve the link between output indicators and planned targets in the DPE’s annual performance plan so that the measured performance provides useful and reliable information and insights to users on the DPE’s planning and delivery on its mandate and objectives.

8.1.9 Improve the ways in which various output indicators are defined in the DPE’s annual performance plan and stipulate how the planned targets would be measured and what evidence would be needed to support the achievements.
8.1.8 Ensure that the Accounting Officer improves controls and systems to ensure the department achieves an unqualified audit outcome and matters of emphasis from each year must be addressed in the subsequent year.

8.1.9 Improve procurement and supply chain management practices in the DPE so that Information Technologies related goods and services are procured through State Information Technology Agency (SITA) as required by Treasury Regulation 16A6.3(e) and section 7(3) of the SITA Act.
8.1.9 Strengthen governance and accountability by ensuring that shareholder compacts are concluded by the third quarter of the preceding financial year.

Furthermore, such shareholder compacts should be presented to the Committee upon completion.

8.1.10 Ensure that all state-owned companies have regular preparation and review of financial reports.
Furthermore, ensure that there is regular training of officials on the financial reporting framework and the continuous monitoring compliance with key legislation.

8.1.11 Create an enabling environment to encourage public-public partnerships, where government departments and state-owned companies can collaborate to leverage on the capacity of the state.

Secondly, government departments should be encouraged to use the services of state agencies and state-owned companies.
It is our view that, Denel would be self-sustainable if its industrial and advanced manufacturing capabilities were 42 50 used to produce vehicles and advanced technologies to enhance the work of the police and other departments.

8.1.12 Ensure that there is a performance management system which is aligned to the developmental state principles and standard reporting guidelines for SOEs.

8.1.13 Ensure the development of an integrated reporting system, monitoring and evaluation capability for all the SOCs.
8.1.14 Ensure that Parliament is consulted when policy changes such as the sale or disposal of state-owned assets or shares are taken.

Furthermore, the department must ensure that it develops a policy on the disposal of state-owned assets.

8.1.15 Ensure that the decision to dispose more than 50% of South African Airways shares is reviewed and efforts must be made to ensure the state still hold majority shares.
8.1.16 Ensure that the mandates of Denel and Safcol are broadened to allow the entities to diversify their product and service offering in order to assist government in advancing its developmental objectives.

8.1.17 Ensure that annual reports and annual financial statements of SOCs are submitted to Parliament on time and decisive action is taken against SOCs not complying with the submission.
8.1.18 Address financial challenges in SOCs which are impacting negatively on the completion of audit results and outcomes.

8.1.19 Improve the capacity of board audit risks committee, the internal audit function in the department and SOCs to better respond to audit outcomes in line with the provisions of the PFMA.

9.

CONCLUDING REMARKS The Committee notes that Government will reduce the continual demands on South Africa’s limited public resources by state-owned companies.
For this reason, SOCs need to develop and implement sustainable turnaround plans.

The future of our state-owned companies is under consideration by the Presidential State-Owned Enterprises Council.

Their future will be informed by the value they create and whether they can be run as sustainable entities without bailouts from the fiscus.

Some state- owned companies will be retained, while others will be rationalised or consolidated.
The Committee would like to express its gratitude to the Auditor-General, leadership and management of the 43 51 Department of Public Enterprises, state-owned companies and the parliamentary officials supporting the Committee for their hard work and co-operation during this process.

Report to be considered.

44 52 2.
44 52 2.

REPORT OF THE PORTFOLIO COMMITTEE ON JUSTICE AND CORRECTIONAL SERVICES ON THE CANNABIS FOR PRIVATE PURPOSES BILL [B 19 - 2020] (NATIONAL ASSEMBLY – SEC 75), DATED 1 NOVEMBER 2023 The Portfolio Committee on Justice and Correctional Services (“the Committee”), having considered the Cannabis for Private Purposes Bill [B 19 - 2020] (National Assembly – section 75), referred to it and classified by the Joint Tagging Mechanism (JTM) as a section 75 Bill, presents the Bill [B 19B – 2020].
The Committee reports further, as follows: 1.

In Minister for Justice and Constitutional Development and Others v Prince 2018 (6) SA 393 (CC) (“Prince judgment”), the Constitutional Court declared the following legislative provisions unconstitutional, as they amount to an impermissible limitation of the right to privacy: 1.1.
Section 4(b) (possession) and section 5(b) (dealing on the basis of cultivation) of the Drugs and Drugs Trafficking Act 140 of 1992 (the Drugs Act), read with Part III of Schedule 2 of that Act; and 1.2. section 22A(9)(a)(i) of the Medicines and Related Substances Control Act, read with Schedule 7 of Government Notice No.

R 509 of 2003.

2.

The Court suspended the order of invalidity for 24 months for Parliament to correct the constitutional defects by 17 September 2020.
The Court provided a reading-in provision that ensures that an adult will not be guilty of a criminal offence if they use, possess, or cultivate cannabis for their personal consumption in private, which continues to apply.

3.

On 1 September 2020, the Bill was introduced and referred to the Committee for consideration and report.

53 4.
53 4.

The Bill was introduced with the intent to address only the Prince judgment, which broadly focussed on considerations relating to the right of privacy as far as the use of cannabis by adults for private purpose.

5.

Due to the complexity of the subject matter, the Committee has facilitated extensive public consultation processes and deliberations with numerous stakeholders.

6.
6.

The Bill as tabled and deliberated on by the Committee up until its meeting of 12 September 2023 did not look beyond the adult-centred focus of the private purpose use of cannabis.
However, the Committee was called upon by the Department of Justice and Constitutional Development to consider extending the scope of the Bill to also accommodate considerations relating to the best interest of the child, as the processing of children within the criminal justice system in relation to cannabis offences was found unconstitutional in Centre for Child Law v Director of Public Prosecutions, Johannesburg and Others [2022] ZACC 35 (Centre for Child Law judgment): 6.1.
On 29 September 2022, the Constitutional Court, in Centre for Child Law judgment, confirmed the order of the High Court, which declared section 4(b) of the Drugs and Drug Trafficking Act 140 of 1992 to be inconsistent with the Constitution and invalid to the extent that it criminalises the use and/or possession of cannabis by a child.

6.2.
6.2.

The Constitutional Court suspended the operation of the order of constitutional invalidity for a period of 24 months for Parliament to finalise the legislative reform process.

The date by which the defect must be corrected by Parliament is 28 September 2024.

7.

Previous deliberations and public submissions called for by the Committee on the Bill were to the Prince judgment context and considerations only.
To accommodate the Centre for Child Law judgment in the Bill, the Committee sought in terms of Rule 286(4)(b) of the National Assembly Rules and received permission from the National Assembly to extend the subject of the Bill to address issues relating to the best interest of the child (in compliance with the Centre for Child Law judgment), in addition to the 54 privacy right protection reflected in the Bill in relation to the private use, possession and cultivation of cannabis by adults in a private space (in compliance with the Prince judgment).
8.
The Bill, as presented by Committee, proposes to: • • • • • • • Respect the right to privacy of an adult person to use or possess cannabis; Regulate the use or possession of cannabis by an adult person; Provide for an alternative manner by which to address the issue of the prohibited use, possession of, or dealing in, cannabis by children, with due regard to the best interest of the child; Prohibit the dealing in cannabis; Provide for the expungement of criminal records of persons convicted of possession or use of cannabis or dealing in cannabis based on a presumption; Amend provisions of certain laws; and Provide for matters connected therewith.
9.

The Committee notes that the cannabis and hemp sector is one of fourteen priority sectors identified by Government to secure investment, job creation and support for sustainable rural livelihoods.

The Committee hopes that the Bill paves the way, as a first step, for the development of legislation to address the regulation of cannabis for commercial purposes.

Report to be considered.

55 3.


REPORT OF THE PORTFOLIO COMMITTEE ON JUSTICE AND CORRECTIONAL SERVICES ON THE REGULATION OF INTERCEPTION OF COMMUNICATIONS AND PROVISION OF COMMUNICATION-RELATED INFORMATION AMENDMENT BILL [B28 - 2023], DATED 1 NOVEMBER 2023.
The Portfolio Committee on Justice and Correctional Services, having considered the Regulation of Interception of Communications and Provision of Communication-Related Information Amendment Bill [B28 – 2023] (National Assembly – section 75), referred to it and classified by the Joint Tagging Mechanism (JTM) as a section 75 Bill, reports the Bill with amendments [B28A – 2023]: 1.
On 4 February 2021, in Amabhungane Centre for Investigative Journalism NPC and Another v Minister of Justice and Correctional Services and Others 2021 (3) SA 246 (CC) (Amabhungane), the Constitutional Court confirmed the declaration by the High Court of South Africa, Gauteng Division, Pretoria that the Regulation of Interception of Communications and Provision of Communication-Related Information Act, 2002 (Act No.
70 of 2002) (RICA) is unconstitutional to the extent that it fails to provide adequate safeguards to protect the right to privacy, as buttressed by the rights of access to courts, freedom of expression and the media, and legal privilege.

2.
The Constitutional Court declared RICA to be unconstitutional to the extent that it fails to— • Provide for safeguards to ensure that a judge designated in terms of section 1 is sufficiently independent; • Provide for notifying the subject of surveillance of his or her surveillance, as soon as notification can be given without jeopardising the purpose of surveillance, after surveillance has been terminated; • Adequately provide safeguards to address the fact that directions are sought and obtained ex parte; • Adeqately prescribe procedures to ensure that data obtained pursuant to the interception of communications is managed lawfully and not used or interfered with 1 56 unlawfully, including prescribing procedures to be followed for examining, copying, sharing, sorting through, using, storing, or destroying the data; and • Provide adequate safeguards where the subject of surveillance is a practising lawyer or journalist.
3.

The Constitutional Court suspended the declaration of unconstitutionality for 36 months to afford Parliament an opportunity to cure the defects causing the invalidity, that is by 3 February 2024.

4.
4.

The Court granted interim relief by way of a reading-in of certain provisions to RICA, which provisions (on the disclosure that the person in respect of whom a direction, extension of a direction or entry warrant is sought is a journalist or practising lawyer and post-surveillance notification) will operate for the duration of the suspension.

5.
Briefly, the Bill seeks to amend RICA to provide for — • The designation of an independent designated judge; • The designation of an independent review judge and the powers and functions of the review judge; • The tenure of designated and review judges; • Adequate safeguards where the subject of surveillance is a journalist or practising lawyer; • Post-surveillance notification; • Adequate safeguards to address the fact that interception directions are sought and obtained ex parte; • Adequate procedures to ensure that data obtained pursuant to the interception of communications is managed lawfully and not used or interfered with unlawfully; • Procedures to be followed for processing, examining, copying, sharing, disclosing, sorting through, using, storing or destroying of any data; and • For principles for the safeguarding of data when dealing with the management of data.
2 57 6.

The Bill was introduced on 29 August 2023 and referred to the Committee for consideration and report.

The Committee was briefed on the contents of the Bill on 8 September 2023 and the Bill was advertised for public comment with a closing date of 6 October 2023.

7.
7.

The Committee acknowledges the objection that the Bill addresses the Constitutional Court’s order in a minimalist fashion falling short of the comprehensive reform of RICA that is required to prevent future abuse, as well as the specific objections raised in the submissions received.

The Committee notes that the Bill is intended as an interim measure to address the defects identified by Constitutional Court within the given timeframe and is not a comprehensive reform of RICA.
The Committee is informed that the Department of Justice and Constitutional Development will develop the necessary legislation and, consequently, urges the Ministry to introduce a Bill that comprehensively overhauls RICA to achieve the correct balance of rights and interests by the end of January 2025.

Furthermore, the Committee will include a recommendation addressing the need for comprehensive legislation in its Legacy report for the incoming Committee of the Seventh Parliament to prioritise.
Report to be Considered 3 58 4.

Report of the Portfolio Committee on Justice and Correctional Services on the Divorce Amendment Bill [B 32-2022], dated 1 November 2023 The Portfolio Committee on Justice and Correctional Services, having considered the Divorce Amendment Bill [B32 – 2022], is of the opinion that it is not desirable to proceed with the Bill: 1.

The Bill aims to amend the Divorce Act, 1979 (Act No.
70 of 1979) to remedy the constitutional defects identified by the Constitutional Court in Women’s Legal Centre Trust vs President of the Republic of South Africa and Others [2022] ZACC 23.

2.

The Constitutional Court held that the Divorce Act, 1979, is inconsistent with sections 9, 10, 28 and 34 of the Constitution, 1996.
In particular, it held that sections 6, 7(3) and 9(1) of the Divorce Act are unconstitutional as these fail to safeguard the interests of minor or dependent children of Muslim marriages in the same manner as children of other marriages on the dissolution of the marriage; fail to provide for the redistribution of assets on the dissolution of a Muslim marriage; and fail to make provision for the forfeiture of patrimonial benefits on the dissolution of a Muslim marriage in the same terms as other dissolved marriages, respectively.
3.

The Court gave the Executive and Parliament 24 months to remedy the constitutional defects, that is by 28 June 2024, and specified measures that will apply pending the amendment of the Divorce Act or the introduction of new legislation.

However, these measures lapse at the end of the 24-month period.

4.

The Minister of Justice and Correctional Services introduced the Divorce Amendment Bill [B22 – 2023] on 20 July 2023 and the Bill was referred to the Committee for consideration and report.

5.
5.

The Divorce Amendment Bill [B22 – 2023] is also intended to address the constitutional defects identified by the Constitutional Court in the WLCT judgement, and its provisions are similar to those found in this Bill.

The Committee decided to proceed with the Bill introduced by the Executive and considered the contents of the Private Members Bill before it as far as possible.

59 Report to be considered 60 National Council of Provinces 1.
Report of the Select Committee on Security and Justice on the Amendments to the Practical Guidelines for Employees, submitted in terms of section 10(4)(b) of the Protected Disclosures Act, 2000 (Act No.

26 of 2000), dated 1 November 2023.

The Select Committee on Security and Justice, having considered the Amendments to the Practical Guidelines for Employees, submitted in terms of section 10(4)(b) of the Protected Disclosures Act, 2000 (Act No.
26 of 2000), and referred to the Committee on 20 September 2023, reports as follows: 1.

Section 10(4)(a) - the Minister of Justice and Correctional Services must issue practical guidelines (Guidelines) which explain— i. the provisions of the Act; and ii.

all procedures which are available in terms of any law to employees or workers who wish to report or otherwise remedy an impropriety.

2.

The Guidelines must be issued after consultation with the Minister for the Public Service and Administration.

3.
3.

Section 10(4)(b) - the Guidelines must be approved by Parliament before publication in the Gazette.

4.

The Committee received a briefing on the Guidelines on 25 October 2023.

5.

The Act was amended on 2 August 2017.
Before its amendment, section 8(1) of the Act provided that any disclosure made in good faith to— a. the Public Protector; b. the Auditor-General; or c. any person or body prescribed for the purposes of that section and in respect of which disclosure the employee or worker concerned reasonably believes that— 1 61 the relevant impropriety falls within any description of matters which, in the ordinary course, are dealt with by the person or body concerned; and the information disclosed, and any allegation contained in it, are substantially true, is a protected disclosure.
6.

In August 2017 section 8(1) was amended to specifically include— i. the South African Human Rights Commission; ii.

the Commission for Gender Equality; iii.

the Commission for Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities; and iv.

the Public Service Commission, as other institutions to which protected disclosures could also be made.
Committee recommendation to the National Council of Provinces The Committee, having considered the Amendments to the Practical Guidelines for Employees, submitted in terms of section 10(4)(b) of the Protected Disclosures Act, 2000 (Act No.

26 of 2000), and referred to the Committee on 20 September 2023, recommends the National Council of Provinces approve said Guidelines as tabled.

Report to be considered.

2 62